What is a Stacked Waterfall Chart in Excel?

Introduction

Stacked waterfall chart? The name sounds confusing, doesn’t it? All I can understand from the word itself is that it is a kind of chart in Excel in which values are arranged one on another to reach a particular conclusion.

But is it really like that? Let’s understand what exactly a Stacked waterfall chart is, its key components, and how you can create one in Excel. The aim of writing this blog is to simplify the concept of a Stacked waterfall chart for you. So, without further ado, let’s get started.

Understanding a Stacked Waterfall Chart

A stacked waterfall chart is an alternative to a standard waterfall chart. First, let’s understand what a standard waterfall chart is. A standard waterfall chart shows individual changes between a starting and ending value. In this chart, you can only see the overall increase or decrease between steps.

On the other hand, a stacked waterfall chart shows overall data with several categories or components stacked within each column. It divides each step into subcategories to show how several elements contribute to the change. You should use this type of chart when you want to monitor the effects of several factors on an outcome in a single chart.

Each column in a stacked waterfall chart represents a stage. Each stacked bar represents a different component. For example, it can display how different revenue sources or costs affect net profit over time in financial analysis.

Let’s take another example: project managers can use a stacked waterfall chart to more easily determine which tasks lead to the biggest changes and how each task’s contribution affects project milestones.

In other words, this chart is especially helpful when several contributors to a result are involved, and you need to examine the total and its breakdown. It facilitates faster evaluation of the elements that influence performance and enhances decision-making in scenarios with complicated data.

Key Components of a Stacked Waterfall Chart

A stacked waterfall chart is an advanced visualisation tool that helps analyse data by breaking it down into positive, negative, and total changes over time or categories. Understanding its key components is crucial for effectively interpreting the insights it provides.

Here are the critical components of a stacked waterfall chart:

• Columns: Columns in a stacked waterfall chart represent different data points, such as positive, negative, and total changes.

• • Positive columns: Indicate growth or gains in the data set.
  • Negative columns: Show a decline or loss in the values.
  • Total columns: Display the cumulative effect of all previous values, summarising the overall impact.

• Stacking: In a stacked waterfall chart, values from different data series are stacked on top of each other within each column. This stacking highlights how various components contribute to the total value. Each segment within a column adds to or subtracts from the cumulative value, offering a clearer understanding of how individual categories affect the overall outcome.

• Color Coding: Color coding plays a significant role in distinguishing data categories. Each data type (positive, negative, or total) is assigned a distinct colour, allowing users to easily differentiate between various contributions to the total value and interpret trends more effectively.

Creating a Stacked Waterfall Chart in Excel: Step-by-Step Guide

Here’s a detailed guide on creating a stacked waterfall chart in Excel to visualise cumulative data changes across multiple categories.

Step 1: Prepare Your Data

Start by organising your data into a suitable format. In a stacked waterfall chart, you need a few columns:

• Categories: List the items you want to visualise (e.g., months, stages, or departments).

• Data Points: Create columns for each stack segment, showing how much each component contributes. For example, you might break down total revenue into multiple revenue sources in financial analysis.

Your data should include values reflecting positive and negative changes over time. Ensure that the total values reflect a cumulative effect of the individual components. This organisation is crucial because Excel will use these numbers to stack and display the individual elements within each column of your chart.

Step 2: Insert a Basic Waterfall Chart

Once your data is ready, it’s time to insert the chart:

• Select the data range you’ve prepared.
• Go to the Insert tab in Excel’s ribbon.
• Click on the Waterfall Chart from the Chart
• Choose Waterfall from the drop-down options.

At this point, Excel will generate a basic waterfall chart using your selected data. This chart may not appear as stacked, but don’t worry; you’ll adjust it in the next step.

Step 3: Customise the Chart to Make It Stacked

Now that you have a basic waterfall chart, you need to customise it to stack the data series:

• Right-click on the chart and choose Select Data from the context menu.
• In the Select Data Source dialogue box, click Add to add a new data series if necessary.
• Ensure that each segment you want to stack is included as a separate series. You may need to repeat this step for each category.
• Adjust the series order to reflect how you want the stacks to appear, ensuring the data is correctly layered within each category.

Step 4: Format the Chart

To enhance the chart’s readability, you can format it by adding labels, colours, and other elements:

• Add Data Labels: Right-click any bar in the chart select Add Data Labels to show the actual values for each segment.

• Change Colors: To make the chart visually clearer, customise the colour scheme for each series by clicking on individual bars and selecting a colour from the Format

• Adjust Axis and Titles: Modify the axis labels, chart title, and legends to make your chart more informative. Ensure the title is concise and the axis is clear to understand.

This process transforms your basic waterfall chart into a fully functional stacked waterfall chart, allowing you to visualise cumulative changes effectively.

Common Issues and Troubleshooting

While creating stacked waterfall charts in Excel, users may encounter a few common issues that can hinder chart accuracy or clarity. Understanding these challenges and how to address them will ensure that your chart is visually appealing and correctly represents the data.

Here are some common issues and their troubleshooting solutions:

• Incorrect Data Ranges: Often, Excel may select the wrong data ranges when creating the chart, leading to incomplete or inaccurate results.

• • Solution: Double-check the data range and manually select the correct cells before generating the chart.

• Improper Stacking: The values may not stack correctly, especially when using multiple categories or series.

• • Solution: Ensure your data is appropriately structured with consistent positive and negative values to achieve the desired stacking effect.

• Labelling Errors: Misaligned or missing labels can make it difficult to interpret the chart.

• • Solution: Adjust the label settings by enabling data labels and customising them for clarity.

• Colour Confusion: Similar or confusing colour schemes can make it hard to differentiate between data points.

• • Solution: Customize the chart’s colour scheme to ensure each series or category is distinguishable.

These troubleshooting steps can help resolve common problems and improve the overall quality of your stacked waterfall chart.

Frequently Asked Questions

What is a stacked waterfall chart in Excel?

A stacked waterfall chart in Excel is a visual tool for breaking down data into multiple categories and displaying cumulative changes. It stacks data segments within each column, making it useful for analysing multiple contributors to an overall result.

How do I create a stacked waterfall chart in Excel?

To create a stacked waterfall chart in Excel, first organise your data, insert a basic waterfall chart, and then adjust it by stacking categories. Format it with colours and labels for clarity.

Why use a stacked waterfall chart in Excel?

Use a stacked waterfall chart in Excel to visualise the impact of multiple contributors on an outcome. It simplifies complex data analysis by displaying how various components affect the total result.

Conclusion

A stacked waterfall chart in Excel is a powerful tool for visualising cumulative changes across multiple categories. It offers deeper insights by breaking data into segments within each column, highlighting how individual components contribute to the overall outcome.

You can effectively track positive and negative changes over time by organising your data, creating a basic waterfall chart, and stacking data series. While the process may present some challenges, understanding key components like columns, stacking, and colour coding ensures clarity and accuracy.

With the right approach, a stacked waterfall chart enhances decision-making in complex data scenarios.